The Return of the (Sales) King

Twenty (20) years ago at the dawn of the commercial internet the leading CEOs and entrepreneurs were sales driven. Everyone was scrambling to make sense of a new channel and virtually every existing business in the world seemed to have a natural place on the web. There were no expectations- not low expectations, literally no expectations, about how things should work. In some cases there was not even awareness that the Internet existed. UI/UX, ecommerce, web sites, even email, it was all a giant greenfield and one of the biggest question was “is it safe to type in your credit card?” not “is it safe to use my real email address?” (Note that the exact opposite is now true- you will put your credit card into random sites with impunity but fear entering your actual email into a form.)

Because these early heady days were the wild west, it was the sales driven leader that reigned for the first decade of the web- the Sales King. The sales CEO had to bring dollars online- ad dollars, commerce dollars, B2B dollars, IT dollars. New ways to buy and deliver advertising, physical goods, services and software all demanded massive persuasion.

With product expectations all over the place, most of the time people were just thrilled (or skeptical) that they could perform the same terrestrial activities virtually. And advertisers came too, cautiously at first, lured by the promise of the web and then like a sea of wildebeests during migration. Everyone made it up as they went along and standards were slowly born. Just like Betamax vs VHS, IAB ad units slowly took hold and credit card companies solved issues about fraud (mostly). Advertisers had no idea what to expect but quickly became enamored by the sexy promise of data, of tracking and of targeting and of ROI. The click through was born.

So for ten years we focused on revenue (not all of us and not exclusively), but those that could convince big brands and advertisers to move their budgets to the web prospered. Those that could help coax consumers to open their web wallets prospered. Those that could enable the first two execute prospered. And then following the dotcom crash of 2000 and recession in the early 2000s, things began to shift.

To be certain, as everyone panicked about the recession (or obliteration for many companies) and revenues cratered sales was the primary focus. But out of the ashes of 1.0 came a new set of CEOs and leaders who took a longer (slightly) view of the web. These leaders were the Web 2.0 CEOs and they were Product Kings. By building a great product, by focusing on UI and functionality like a hand crafted beer they would win customers over for the long run. The best products would win, not just those with the best sales & marketing.

And the result was remarkable. A plethora of fresh, innovative companies elbowed onto center stage, buoyed by the acceptance of the web that the Sales Kings had forged. Across almost all facets of the web they focused on building great products, with elegant design and clean, simple UIs. As cloud computing became a reality, it was like pouring gasoline on a campfire for the Product Kings. When I started my first company there were two major considerations we always had to deal with: 1. How much did we have to pay Oracle for a DB license and 2. How much iron did we have in how much rackspace. But the cloud destroyed those constraints and enabled the smallest teams to stand up minimally viable products (MVPs) in days.

Today the cloud enables the creation of all types of companies. The cost of starting a company (launching a product) went from hundreds of thousands of dollars to tens of thousands to thousands (to less?). Cloud computing literally cut the cost of starting a company by two orders of magnitude. This had major ripples in the VC world that are still playing out, but that subject and its implications for return on capital, has been exhaustively covered by others .

Now, as we enter the third decade of the Internet, there is a new CEO King rising- the return of the Sales King as CEO. (we’ll go light on the LOTR references here). Here’s why: with the dramatic decrease in product development time, the web is being *flooded* with an influx of new products, companies and “feature” companies. This is great for consumers and businesses, but it also means that there is fragmentation of mind share for both B2C and B2B. There is so much great stuff out there (and lots of mediocre too), that users don’t know which way to turn. The best product, the best UI, the best features- they don’t always win. In fact it is the good-enough product with great sales and marketing that is now winning. And this is re-creating a new opportunity for the Sales King to forge a path.

Don’t construe this as arguing against product, I have come to innately understand that a good product is core to the success of any company and without it real success is impossible. Without good product you are doomed from the start but “if you build it they will come” is just not true. The sales organization with solid marketing as the proverbial “Crown Prince” is taking back power. This is particularly true because in a crowded field of look-a-like products and services, CEOs must drive their company above the noise. A case can be made that it is actually the marketing class that will become the ruling elite but it seems to me a good sales team can cover for weak marketing more than good marketing can cover for weak sales when it comes down to actually booking business.

And irony of ironies: for most companies this return to marketing means raising money- and in some cases lots of money. So even though the product driven capital needs have shrunk dramatically, the sales and marketing capital needs are sky rocketing. Let’s see how the next decade goes.